By this time next year, shares of small drug developer Dendreon (NASDAQ:DNDN) will either be a lot higher or a lot lower. They certainly won't be affected much by an earnings report like the one from earlier in the week, but would change because by then the FDA will have decided about Provenge, a treatment for late-stage prostate cancer and the company's only drug to have finished late-stage clinical trials.

Assuming management can meet its timelines (something it has done this past year), Dendreon said it will make its deadline to file a biologics license application for approval of Provenge by the end of the year. Because there are so few treatments for late-stage prostate cancer, the Food and Drug Administration should give Provenge a six-month priority review, meaning a decision on the drug is expected around the middle of next year.

Speaking of approval, I have a hard time believing the FDA will approve Provenge outright on the first go-around next year because the drug showed a statistically significant survival advantage in only one of its phase 3 trials. Likewise, I have an even harder time imagining the FDA issuing a non-approval letter for the drug unless some nasty hidden side effects crop up, which is highly doubtful. I'm placing my bet on approval, with the approval subject to the company successfully completing the ongoing third phase 3 trial for the drug.

Having to wait for this phase 3 trial's completion for possible full approval will still give long-term investors a chance for market-beating returns. Even if Provenge overcomes the slim odds and gets approved next year, Dendreon would still have to raise some cash via financings because its operating expenses were nearly $22 million for the latest quarter and there is only $93 million sitting on the balance sheet.

This week, Dendreon did release somewhat positive results from a trial of Provenge in earlier stage prostate cancer. These results won't change anyone's opinion about worries about the drug's effectiveness, but should help the case for Provenge's safety because treatment with the drug was "generally well tolerated" in the trial. Either way, the debate over Provenge will continue. But by this time next year, investors will have a much better idea of Dendreon's potential.

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Fool contributor Brian Lawler own shares of Dendreon. The Fool has a disclosure policy .